Thought For A Day
Archives of “June 2020” month
rssGDP Update: -52.8%
Moody’s takes rating actions on 11 Indian banks following sovereign downgrade -Full Text
Moody’s Investors Service has taken rating actions on the following 11 Indian banks:
(1) Bank of Baroda (BOB),
(2) Bank of India (BOI),
(3) Canara Bank (Canara),
(4) Central Bank of India (CBI),
(5) Export-Import Bank of India (EXIM India),
(6) HDFC Bank Limited (HDFC Bank),
(7) Indian Overseas Bank (IOB),
(8) IndusInd Bank Limited (IndusInd),
(9) Punjab National Bank (PNB),
(10) State Bank of India (SBI) and
(11) Union Bank of India (UBI). (more…)
Russia reportedly still hasn’t decided on its position on OPEC+ cuts
A decision on that is expected some time today
Bloomberg with the headlines here, adding that there is some support in Russia for extending the current output cuts. Again, as a reminder that the agreement for the output cuts deal is only for the months of May and June.
As such, OPEC+ is looking to get a meeting together to extend that in order to maintain stability in the oil market. But as the reopening of economies gather pace, it will be a real test of resolve/compliance in enforcing any extension of the deal in the coming months.
RBA leaves cash rate unchanged at 0.25%
RBA announces their latest monetary policy decision – 2 June 2020
- Prior 0.25%
- 3-year government bond target maintained at 0.25%
- RBA prepared to scale up bond purchases if necessary
- Won’t raise cash rate until progress is made towards full employment, inflation target
- Accommodative approach to be maintained for as long as it is required
- Market operations supporting a high level of liquidity
- Economy is experiencing a severe downturn
- Household spending weakened very considerably
- It is possible the downturn depth will be less than earlier expected
- Sees continued improvement in financial markets
The language in bold is new but I don’t think it makes much of a difference – at least not now. Their forward guidance on the cash rate and yields target remains unchanged, so that says a lot more that this decision is more of a non-event if anything else.
The other thing to take note of is that they did not make mention of the relative strength of the aussie since its last meeting back in May.
The aussie has gained by over 5% against the dollar in the past month and may be on its way towards 0.7000 so that may provide some relative comfort for buyers.
Other than that, there’s nothing much to see from the decision here. AUD/USD is little changed on the session at around 0.6790 currently.
France’s Le Maire says that French economy to contract by 11% this year
Comments by France finance minister, Bruno Le Maire
Again, just take all these forecast narratives with a pinch of salt because they will constantly change depending on economic developments in the coming weeks/months.
In April, Le Maire said that this will all just have a 8% impact on the French economy. And better yet, back in late February, he said that the virus impact will only chip away 0.1% of French economic growth. Good times.
US President Trump signal on imposing martial law – what it means for the USD
This evening (US time) in Washington Trump provided a strong indication that he would be sending in troops (he is not quite there yet but it appears likely):
- Trump speaking now, awaiting any comments he might make about martial law
As I post there are reports of at least one US Blackhawk military helicopter over Washington DC. What’s the bet that US troops are moved in before the formal invocation of the Insurrection Act?
After Trump spoke at the White House he walked across to a local church for a photo opportunity. Protestors were cleared from the park before the President walked to the church in order to ensure his safety:
This was written in 1880 – Speculation As A Fine Art by Dickson G. Watts. (Take print out and keep on Desk )
A great quote that sums up trading. “Studies in Tape Reading”
European equity close: Another day of gains
Closing changes for the main European bourses:
- UK FTSE 100 +1.6%
- French CAC +1.5%
- German DAX – closed for holiday
- Italy MIB – +1.8%
- Spain IBEX +1.5%
If you’re bullish on the global recovery from the virus, there is a compelling case to shift money to European equities from US equities on valuation. The euro is consolidating today but it’s still comfortably above 1.10.